In 1994, amid great fanfare, Paul Keating attended the opening of the Australian built and funded Friendship Bridge, linking Vientiane to Thailand directly by road. There was a lot of hype at the time about the impact of the bridge, both by the proponents and opponents. But perhaps the longer term signficance of the bridge was the one least recognised at the time – it was the first major GMS-style cross-border transport project.

At the time, “the GMS” was still an idea which the Asian Development Bank was ardently trying to sell, but no one was sure whether it would catch. Now the GMS has well and truly arrived, and it is cashed up. It is by far the most important investment framework for land-locked (now land-linked!) Laos. Unlike the Mekong River Commission, the GMS is a regional initiative that has the buy-in of the highest levels of government in Laos; indeed it has produced a radical new re-imagining of the nation’s economic geography.

Through the Friendship Bridge, Australian aid gave the idea of the GMS an important filip in its critical early years. However once the orgy of self-promotion and lucrative commercial contracts was over, the aid program to Laos entered a decade of penance, supporting a wide range of small-scale community development activities in livelihoods and health, including some exceptional projects, such as the primary health care work of Save the Children Australia in Xaignabouli.

Now Australia’s aid program to Laos has well and truly recovered from any lingering guilt hangovers. In 2004 it abandoned any priority for health or rural livelihoods and re-joined the GMS chorus: rapid economic growth and regional integration became the watchwords. With the White Paper on aid released earlier this year, Australia announced that it would commit a massive $40-50 million per year to GMS infrastructure development. AusAID is still in the process of developing a new Mekong strategy to try and figure out how to spend all this money – it is not due until early next year, but I believe the focus will be on transport and energy infrastructure.

Australian aid to Laos is now completely aligned to the agendas of the Asian Development Bank and the World Bank in the Mekong region. This has been the case intellectually for some years now, with Australian aid strategy reflecting essentially repeating the analysis of these two institutions. Now it is increasingly the case financially and programatically. Indeed, in coming years, Australian aid will have virtually no independent implementation capacity – the great bulk of aid will be disbursed through multilateral agencies.

So what does all this mean? There is no doubt that in jumping on the GMS bandwagon, Australia is supporting an idea that has the full support of the Government of Laos, and other regional governments. The question is, is it a good idea? Of course questioning the claimed benefits of ‘regional integration’ is like questioning the benefits motherhood and apple pie. (The ADB even claims ‘creating a greater sense of community’ to be a primary objective of its GMS program.) And of course there is a litany of studies demonstrating the link between infrastructure development, economic growth and poverty reduction (see Connecting East Asia, for example).

The problem is, the production of this sort of knowledge is largely monopolised by the ADB and the World Bank and it has distinct biases. There are now a number of studies (see for example, Watermelons, bars and trucks: dangerous intersections in Northwest Lao PDR) and multitudes of anecdotal observations (some on this blog site) which show that for Laos, the emerging patterns of regional economic integration have a darker underside, particularly for the more vulnerable ethnic minorities, and for the natural environment. The great challenge for AusAID’s new Mekong Strategy is whether it can get beyond the GMS hype and engage the messy reality of economic
transformation.

See Australians and Laos – Part 1